Companies can improve their profitability and competitiveness by implementing effective risk management and risk control procedures, leading to lower costs in all aspects of their operations, it was stated yesterday.

Speaking at the inception of the Association of Irish Risk Management, the Minister for Finance, Mr McCreevy, said companies and organisations must adopt a more holistic and corporate approach to risk management and accident/claims mitigation.

"Employer liability premiums are a significant expense, particularly for small firms, and therefore it is essential that firms have and implement effective risk management and risk control procedures.

"A better understanding of such risks and prevention strategies leads to a more efficient use of resources and advantages over competitors."

AIRM has developed out of the Association of Burglary Insurance Surveyors in Ireland (ABIS), established in 1958 to advise Irish businesses in the assessment and management of cash handling, personal and premises security.

The new organisation is reacting to the changes in the role of the industry from security to risk management and aims to enhance the professional standing of risk managers through education, training and seminars.

Mr Peter Kilcullen, an AIRM founding member, said yesterday: "The fact that major companies and organisations were appointing in-house managers clearly demonstrated that there was a need for us to reassess what we were providing and refocus on the new requirements for the future."

Premium income from non-life insurance policies amounted to £2.2 billion (€2.29 billion) in 1997.

A study published by Deloitte and Touche in 1996 showed the economic impact of high employers' and public liability premiums fell on smaller firms which did not have adequate risk management systems in place.